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World Bank Supports Power Sector Reforms and Expansion
of Natural Gas Use in Tanzania

26 March 2013 (Source: Worldbank.org)

First in a series of policy support operations to reform power and gas sectors

WASHINGTON, March 26, 2013 – The World Bank Board of Executive Directors today approved two International Development Association (IDA) credits amounting to US$121.46 million to Tanzania for power sector reforms, forging public-private partnerships, and strengthening national capacity for the optimal use of the country’s natural gas reserves.

“We are committed to reducing the cost of power supply by expanding the use of domestic natural gas in electricity generation and promoting private sector participation in both the power and gas sectors” said Hon. Professor Sospeter Muhongo, Minister of Energy and Minerals, Tanzania “We are taking concrete steps to strengthen power sector governance and to improve planning and implementation capacities for bringing more electricity to homes and businesses across Tanzania.

The Tanzanian power sector is facing major challenges due to below average rainfall that have reduced hydropower generation and due to inadequate past investment in power generation capacity. As a result, the state-owned electricity utility, TANESCO, has increased the use of expensive emergency generation plants that have placed the sector in financial difficulties. The energy sector’s financial woes are expected to peak in 2014, bringing the cumulative deficit over the period 2011-2014 anywhere between US$760 million to US$1 billion.  Less than 19 percent of Tanzania’s 46 million citizens have access to electricity.

“With these two new operations, the World Bank will help to place the power sector on a more sustainable path, and will help create foundations to maximize benefits of natural gas reserves for all Tanzanians" said Philippe Dongier, World Bank Country Director for Tanzania.

The two projects consist in:

The projects involve collaboration across the World Bank Group, with Jacques Morisset, Lead Economist based in Dar es Salaam serving as team leader for the Development Policy operation, and Robert Schlotterer, Senior Infrastructure Finance Specialist and Alexander Huurdeman, Senior Gas Specialist, serving as co-team leaders for the capacity building project.

PRESS RELEASE NO:
2013/294/AFR